Woman and child moving house

There is little doubt now as to the direction in which house prices are heading in 2021

The housing market is continuing to power ahead at full steam. House prices are showing no signs of cooling and activity levels are reaching record highs.

In our previous blog written at the end of last year, we had flagged two events that would boost the market:

  • The government extending the Coronavirus Job Retention (furlough) Scheme
  • A quicker and more successful vaccine rollout than anticipated

Not only have both these factors come to fruition, they have been supplemented by some generous schemes announced in the March Budget specifically targeting the housing market. While ostensibly the purpose of such schemes (effectively housing subsidies) is to increase access to the housing market, in reality their impact is usually to push prices up, ironically making homes unaffordable to those individuals these schemes profess to want to help!

There is little doubt now as to the direction in which house prices are heading in 2021 which is why we have recently revised our previous forecast of flat house prices in 2021 to a whopping 7.6% rise in the year. While UK house price trends until October 2021 may be following an obvious path given the direction of supportive policy, what happens beyond that is less clear. Although the economy will be on firmer footing, income support, and housing schemes will all be coming to an end at that time. It is at that point we expect a tick up in the unemployment rate. Arguably, any pent-up demand for housing would also have been exhausted by then. As a result, we expect a period of weaker housing demand in 2022 when the dizzying pace of house price increases will finally slow. Until then, though, it seems as far as house prices go, the only way is up!